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Tax on Textbooks? Yes and No

ATTENTION out-of-state students: don’t take that rental copy of “The Art of Public Speaking” home with you. Textbooks rented through Amazon’s “Warehouse Deals” are not to be carried over state lines. Renters will be charged the purchase price of any textbook that goes interstate, according to Amazon’s Textbook Rental Terms and Conditions.

The company declined to explain itself to Inside Higher Education, the industry journal that discovered the fine print. Nor to us. So we asked for insight from Robert Chestnut, senior vice president and general counsel of Chegg.com, which rents textbooks and dispenses online study help.

“It’s well known that Amazon jealously guards its sales-tax position in certain states,” he said. That position: In states where Amazon lacks a physical presence, it doesn’t have to charge customers tax. But a rented book is Amazon property — a presence.

“Why would Amazon be so careful they don’t want one of their textbooks in a state?” Mr. Chestnut asked. “Because they’d have to collect sales tax on all their transactions in that state.” Chegg, he notes, collects sales tax in every state that levies one. He calls a student carrying an Amazon rental “a little timebomb,” adding: “It’s almost like the entire structure of Amazon is challenged. This is fiction, of course, ’cause no one is checking.”